Asahi May Buy Food, Alcohol Companies in Asia-Pacific

Naoki Izumiya, president of Asahi Breweries Ltd., poses for a photograph following an interview in Tokyo, Japan, on Tuesday, April 20, 2010. Photographer: Haruyoshi Yamaguchi/Bloomberg

April 21 (Bloomberg) -- Asahi Breweries Ltd., Japan’s
second-largest beermaker, may buy food and alcohol companies in
the Asia-Pacific region as it aims to raise the proportion of
sales it gets overseas by almost fourfold in five years.

“What we would need is a company with annual sales of 300
to 400 billion yen,” President Naoki Izumiya said in an
interview in Tokyo yesterday. Asahi is looking for targets in
countries including India, Indonesia and Russia as it plans to
boost sales 33 percent to at least 2 trillion yen ($22 billion)
by 2015, from an estimated 1.5 trillion yen in 2010, he said.

Japanese beverage makers are accelerating overseas
expansion after domestic beer demand shrank 16 percent from a
peak in 1994. The Tokyo-based brewer of Super Dry-brand beer can
spend as much as 400 billion yen to buy companies in Japan and
abroad, the company said in December.

“It’s inevitable for Japanese brewers to use mergers and
acquisitions as a means to expand globally,” Yoshiyasu Okihira,
an analyst at Credit Suisse Group AG who has a “neutral”
rating on Asahi shares, said. “Beermakers need to hurry to
invest overseas and in other growth areas, as we expect beer
demand in Japan to fall further.”

Asahi advanced 0.5 percent to close at 1,726 yen on the
Tokyo Stock Exchange. The stock has risen 0.8 percent this year,
compared with an 8.1 percent decline in larger rival Kirin
Holdings Co.

International Revenue

The brewer aims to make overseas sales account for more
than 20 percent of its total revenue in 2015 from 5.3 percent
last year, it said in December. Kirin gets about 25 percent of
sales outside Japan, while Suntory Holdings Ltd. derives 14
percent of sales from abroad, according to the companies’
financial reports.

Asahi plans to turn its overseas business profitable this
year, Izumiya said. The business has been losing money since at
least 1996 when it began brewing Super Dry in North America.

The company plans to double its sales in China to about 20
billion yen in two years by offering more products and
strengthening beer sales, Izumiya said.

Asahi agreed last year to expand its partnership with
China’s Tsingtao Brewery Co., in which it has a 19.99 percent
stake. Asahi aims to use Tsingtao’s breweries and sales network
to expand its sales in China.